With the nation’s largest health insurance company, UnitedHealth Group, planning to exit most Obamacare exchange markets due to weak enrollment and high medical costs, FreedomWorks predicts other insurers will follow suit.
UnitedHealth will reportedly only sell government-subsidized individual plans in a handful of states in 2017.
“The one thing we’ve heard from insurance companies and we’ve seen from insurance companies are the complaints about the unbalanced risk pools,” Jason Pye, director of communications for FreedomWorks, recently told Patient Daily. “You are seeing a lot of older and sicker patients sign up for coverage, they are utilizing their coverage more frequently than they expected and they are losing money as a result of it.”
Pye said UnitedHealth reduced its earning expectations by $425 million in November and lost $720 million on the individual market in 2015.
Last October, UnitedHealth predicted substantial improvement in Obamacare business in 2016. But enrollment has declined, making it abundantly clear that the company could not sustain the medical costs of new customers.
“I think you are seeing insurers lose money, and there are some concerns now about insurance premiums skyrocketing in 2017 because insurers can’t make risk corridors payments anymore because the risk corridors provision expires at the end of the year,” Pye said. “So, they are going to be kind of out in the wilderness.”
Risk corridors compensate insurance companies that end up with higher costs than they expect. By law, insurers are required to sell policies equally to everyone, regardless of medical history -- which may result in higher claims for insurers due to an unhealthy pool of consumers.
If an insurer’s actual claims in a particular year are at least 3 percent greater than the claims projected when the insurer set rates for the year, the government must reimburse the insurer for half of the excess; and if the insurer’s actual claims surpass projected claims by 8 percent, the government must cover 80 percent of the excess.
“Congress prohibited taxpayer funds from being used for the risk corridors program -- the so-called bailout -- which, let’s be honest, is what the risk corridors would have been if Democrats and the Obama administration would have had their way,” he said.
Currently, health care plans making money are funding the risk corridors program, and the ones losing money are receiving the funds.
“With that provision expiring, that program goes away and I think there are going to be more instances of health insurance companies pulling out of the markets,” Pye said.
But with the risk corridors provision expiring this year, Pye said insurers are bound to pull out of the Obamacare markets and ultimately raise their premiums.
“I think you are going to see higher health insurance premiums as a result of that,” he said.
Pye went on to state that consumers are going to get the short end of the stick because they’ve been fed a series of lies about the benefits of Obamacare health plans.
“They’ve already been told if they liked their health insurance plan, they could keep it -- that obviously was a lie,” he said. “They’ve been told if they like their doctor, they can keep (him or her), that was obviously a lie. They are already dealing with narrow provider networks on these health plans as a cost-saving measure as a consequence of this law.”
Pye believes that, ultimately, things will only get worse, so replacing Obamacare should be one of the main focal points of presidential hopefuls.
“I think you are going to see what is already bad become worse, and that is why we are saying that Republicans in Congress should come up with an alternative to this law,” Pye said. “Presidential candidates on the campaign trail should be talking about alternatives to this law and reminding voters of the problems with it. And we think the American people will respond.”
FreedomWorks promotes free markets and individual liberty, and aims to educate, build and mobilize activists advocating smaller government, lower taxes and the rule of law.